Wall Street up on Cisco earnings By MADLEN READ, AP Business Writer

Wall Street up on Cisco earnings By MADLEN READ, AP Business Writer
31 minutes ago



NEW YORK - Stocks advanced Wednesday as solid results in the technology arena further soothed investors a day after the Federal Reserve assured them the economy should keep growing moderately.

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Computer network equipment maker Cisco Systems said its quarterly profit jumped 25 percent and raised its revenue forecast for the year. Meanwhile, wireless provider Sprint Nextel Corp. said its second-quarter profit declined, but the results beat Wall Street expectations and the company said its subscriber base rose by 400,000 to 54 million customers during the quarter.

The upbeat technology news, along with strong gains in beleaguered financial and homebuilding stocks, came a day after the Federal Reserve said that despite an increasingly difficult credit environment, the economy should keep growing moderately.

"Basically, the Fed's telling us we're back to business as usual," said John C. Forelli, portfolio manager for Independence Investment LLC in Boston.

In late morning trading, the Dow rose 79.01, or 0.59 percent, to 13,583.31, after briefly rising more than 100 points.

The Standard & Poor's 500 index rose 14.31, or 0.97 percent, to 1,491.02.

The Nasdaq composite index and Russell 2000 index — which include technology companies and small-cap stocks — made even sharper gains.

"People are getting some appetite for risk again," Forelli said.

The Nasdaq gained 42.63, or 1.66 percent, to 2,604.23.

The Russell 2000 index, battered recently due to credit crunch worries, gained 21.85, or 2.82 percent, to 795.98.

Bonds fell as stocks rose, with the yield on the 10-year Treasury note rising to 4.84 percent from 4.77 percent on Tuesday.

The Dow Jones industrial average finished up 35 points on Tuesday, ending the blue-chip index's five-day streak of triple-digit gains or losses.

The housing market is still weak, which could keep Wall Street nervous going forward. Toll Brothers Inc.'s preliminary measure of fiscal third-quarter revenue showed home building revenue fell 21 percent. However, the company's chief executive said he sees housing demand increasing, and the quarterly revenue estimate of $1.21 billion was better than analysts expected.

The financial and homebuilding sectors — big losers in recent weeks — saw large gains Wednesday, suggesting that investors see value in these pummeled stocks.

Bears Stearns Cos., whose collapsing hedge funds have been a prime cause of jitters in the market, rose 5.5 percent. Lehman Brothers rose 7.4 percent, Citigroup Inc. rose 2 percent, and American Express Co. rose 3 percent.

California homebuilder KB Home rose 6.5 percent after saying late Tuesday it used cash on hand to repay $650 million in debt to rid its balance sheet of obligations. D.R. Horton Inc. rose 4.5 percent; Centex Corp. rose 3.8 percent; and Pulte Homes rose 6.2 percent.

After releasing their quarterly results, Cisco rose $1.61, or 5.4 percent, to $31.30, and Sprint rose 22 cents to $20.44. Toll Brothers rose 90 cents, or 3.9 percent, to $23.85.

Meanwhile, the Nasdaq was also helped by a stronger-than-expected second-quarter profit at Priceline.com Inc. The online travel agent's stock surged $13.46, or 21 percent, to $78.55.

The dollar fell against the euro and British pound, but rose against the yen. Gold prices rose.

Crude oil prices fell 40 cents to $72.02 a barrel, even after the U.S. Department of Energy reported that crude and gasoline inventories fell last week.

Advancing issues outnumbered decliners by about 3 to 1 on the New York Stock Exchange, where volume came to 830.8 million shares.

Overseas, Japan's Nikkei stock average rose 0.64 percent. London's FTSE 100 gained 01.39 percent, Germany's DAX index rose 1.16 percent, and France's CAC-40 climbed 2.30 percent.

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